Power costs may have pulled down July inflation -- DoF

LOWER POWER costs last month as well as steady food
prices likely tempered the rise in prices of widely used goods in July, the
Department of Finance (DoF) said.

“Inflation rate this month (July) is
likely to moderate to 2.7% on the back of stable food prices. Year on year,
power rates also declined,” Finance Undersecretary and chief economist Gil S.
Beltran said in his latest economic bulletin.

“Continuing benign inflation will enable the economy to sustain rapid economic
growth and hurdle volatilities in the world economy with relative ease,” he
added.

If the estimate bears out, inflation would slow from June’s 2.8%, but remain
higher than the 1.9% posted in July 2016.

It would also come in below the 2.85% median of a BusinessWorld poll of
10 economists.

The DoF expects prices of food and non-alcoholic beverages to have risen 3.5%
in July, unchanged from a month earlier, but higher than the 2.7% in July 2016.

“In July, indices for alcoholic beverages and tobacco may have risen by 6.7%
from 6.2% in June, health to 2.5% from 2.3%, and transport from 2.3% to 2.8%,”
according to the economic bulletin.

Meanwhile, growth in prices of housing, utilities and fuels are thought to have
slowed down to 1.7% from 2.1% in June; growth in prices of furnishings and
household equipment may have eased to 2.0% from 2.1% previously, while those of
communication may have dropped to 0.1% from 0.2%.

Prices of clothing and footwear, as well as of education, were likely steady
from a month earlier, both estimated at 2.1%

The bulletin noted that Manila Electric Company’s (Meralco) rate per kilowatt
hour (kWh) for July at the average 200 kilowatts-per-month consumption level
declined to P8.25 from P8.61 a year earlier. It was higher than the P8.18 in
June.

However the power distributor announced earlier a P0.0761-per-kilowatt-hour
increase in the basic rate following June’s P1.43/kWh record cut. July’s
P0.0799/kWh hike in generation charge was partly offset by a refund for
2014-2016 over-collections.

“Finally, the average price of diesel in Metro Manila among the ‘big three’ oil
companies increased to P30.13 per liter in July from P29.7 in the previous
month, and P27.55 in July last year,” the DoF said.

Prices of gasoline in July “slightly dropped to P43.28 per liter from P43.6 in
June, but higher compared to P39.88 a year before.”

Fuel retailers announced a P0.70 per liter increase in gasoline prices and
P1.20/liter for diesel effective July 11 due to higher world crude prices, but
this was followed by price rollbacks a week later. -- Elijah Joseph C.
Tubayan